By Nicholas Larkin
Oct. 12 (Bloomberg) — Gold may climb to $1,879 an ounce by 2013 as investors buy the metal to protect against accelerating inflation, according to Edison Investment Research.
Bullion reached a record $1,061.55 an ounce in London on Oct. 8 as the U.S. kept interest rates near zero and government debt surged on spending aimed at ending the worst economic slump since the 1930s. Edison said in April that gold would reach $1,567 in the “foreseeable future” as investors buy the precious metal as an inflation hedge.
“We reiterate our belief that gold is in the second phase of its bull run and that it has the potential to spike higher in the near term,” Edison analyst Charles Gibson said in a report. “With the world still facing deflationary forces in the near term, gold’s peak is likely to be delayed to 2013, but that its peak will be correspondingly higher at $1,879 an ounce.”
The Fed has kept its target rate for overnight loans among banks between zero and 0.25 percent since December to help stimulate the economy. President Barack Obama increased the nation’s marketable debt to an unprecedented $7.1 trillion as the government borrows to revive growth. Goldman Sachs Group Inc. predicts the U.S. will sell about $2.9 trillion of debt in the two years ending next September.
U.S. consumer prices will expand 1 percent this quarter and 1.8 percent in each of the following two quarters, according to the median estimate of 49 economists surveyed by Bloomberg.
“We assume the continuation of an environment of very low and/or negative real U.S. interest rates and a relatively well- supported oil price,” Gibson said.